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Economy of East Timor


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Prior to and during colonization, Timor was best known for its sandalwood.

In late 1999, about 70% of the economic infrastructure of East Timor was destroyed by Indonesian troops and anti-independence militias, and 260,000 people fled westward. From 2002 to 2005, an international program led by the UN, manned by civilian advisers, 5,000 peacekeepers (8,000 at peak) and 1,300 police officers, substantially reconstructed the infrastructure. By mid-2002, all but about 50,000 of the refugees had returned.

One promising long-term project is the joint development with Australia of petroleum and natural gas resources in the waters southeast of Timor. The Portuguese colonial administration granted concessions to Oceanic Exploration Corporation to develop the deposits. However, this was curtailed by the Indonesian invasion in 1976. The resources were divided between Indonesia and Australia with the Timor Gap Treaty in 1989. The treaty established guidelines for joint exploitation of seabed resources in the area of the "gap" left by then-Portuguese Timor in the maritime boundary agreed between the two countries in 1972. Revenues from the "joint" area were to be divided 50%–50%. Woodside Petroleum and ConocoPhillips began development of some resources in the Timor Gap on behalf of the two governments in 1992.

East Timor inherited no permanent maritime boundaries when it attained independence, repudiating the Timor Gap Treaty as illegal. A provisional agreement (the Timor Sea Treaty, signed when East Timor became independent on May 20, 2002) defined a Joint Petroleum Development Area (JPDA), and awarded 90% of revenues from existing projects in that area to East Timor and 10% to Australia. The first significant new development in the JPDA since Timorese independence is the largest petroleum resource in the Timor Sea, the Greater Sunrise gas field. Its exploitation was the subject of separate agreements in 2003 and 2005. Only 20% of the field lies within
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